Advertisement

1 April 2000

HONG Kong textile manufacturers are calling on all their resources to
stay ahead at a time when prices and margins are being squeezed and
several traditional markets are shrinking. Supplying products that are in
demand, such as twill, Lycra and other stretch fabrics, they offer a wide
range of high-quality textiles, as well as decades of manufacturing and
exporting experience.

The SAR's manufacturers sell primarily into the upper and middle range
of the market, says Raymond Yuen, research officer for textiles and
fabrics at the Hong Kong Trade Development Council (TDC). Much of Hong
Kong's strength lies in the variety available. Although NAFTA has meant
more basic fabrics are being sourced for the important North American
market, from Mexico in particular, manufacturers in Central and South
America do not produce high-end products, says Yuen. Blended fabrics from
both natural and synthetic fibres, which are popular now, are an example
of this and an area where Hong Kong companies are quite strong.

While overseas buyers are, increasingly, dealing directly with fabric
manufacturers, there is still a large market for fabrics coming from Hong
Kong-based sources, which might be manufacturers or agents, says Yuen.

TDC figures show that as of December 1998, there were 1,495 textile
manufacturing establishments within Hong Kong itself, which collectively
employed 18,533 people. The numbers for Hong Kong-owned factories within
mainland China would likely be considerably greater, although the precise
figures are unknown.

The mainland offers both an opportunity and a challenge to Hong Kong
companies. Bill Walker, director of Coles Myer Asia, based in Hong Kong,
notes that the quality of the mainland's textile manufacturers is
improving, especially in northern China. "But at the moment," he
says, "the bulk of the quality production is in Guangdong province",
and much of that, he acknowledges, is Hong Kong-owned. In addition, Hong
Kong manufacturers are very flexible. "They appreciate the need for
supply side management, and they're au fait with the marketing demands in
western markets. That's very important to retailers."

Walker believes that, apart from the demise of denim, there is no really
clear trend in fabrics, although there is an increased use of twill, for
items such as cargo pants, in demand by the Generation X buyers, and more
stretch fibres, such as Lycra.

Goretti Lau, director and general manager of The Quicken Textiles Ltd,
agrees that flexibility and quick response are what maintains the
competitive edge of Hong Kong suppliers. It is the value-added element
that local manufacturers can offer. Because Hong Kong prices are not cheap
-- "our weaker side", she says -- the product range tends
towards the upper end. However, with the recession, wages have levelled
off and raw material costs are down.

Lau deals mostly with the brand buyers directly, enabling her to see
exactly what their demands are, at first hand. For Quicken Textiles, she
finds that stretch denim is doing quite well and has a lot of potential.
The company is also offering wider-width products, as an example of a
value-added service. Its markets remain quite wide-ranging, including the
US, Europe, the mainland and Pakistan.

Flexibility and efficiency are themes echoed by Lydia Chu, general
manager of sourcing for VF Asia Ltd, the Hong Kong-based buying office for
leading US brands such as Wrangler, Lee and Jantzen. Chu says the company
does not have any preference for buying from locally owned companies, but
that Hong Kong businesses have been exporting for a long time and have
built up great expertise in this field.

Hot items right now are stretch products generally, such as Lycra, in
the view of Robin Chong, sales manager for Po Cheong Industries Ltd, a
company with a 30-year history of selling to the US, Europe and South
Africa. "Everyone is asking for this," Chong reiterates.

Chong says that times are difficult and may not pick up anytime soon,
but he believes Hong Kong manufacturers can continue to offer the service,
delivery and quality that customers demand. He finds that clients are
still split evenly between those representing the brand names, and traders
or buying offices based locally.

Hong Kong Non-Woven Fabric Industrial Co Ltd's executive director Peter
Lee explains that his sector is quite limited and although there are new
applications, the non-woven market remains very small. However, he notes
that one advantage Hong Kong-owned companies have is their financial
standing and expertise. That can be useful within the mainland where local
Chinese companies have to apply for foreign currency, in a procedure that
is both rigorous and bureaucratic.

"Most of the mills prefer payment of L/Cs in US dollars," says
Lee, and this is especially the case because Hong Kong manufacturers that
cater for the higher end of the market usually need to source from
overseas. "Their relationship with the mills is better too," Lee
points out, and that can help when time is of the essence. In general
terms, Lee thinks Hong Kong firms offer a better service and wider range
of products than others.

Nonetheless, Lee believes the days of the middleman are numbered, except
for very small orders. Buyers, he says, are increasingly going direct to
the manufacturer.

Few would be complacent. The managing director of one large buying
office located in Hong Kong says they never look at the ownership of a
particular supplier. They deal with whoever can offer the service they
demand. It is, he observes, a totally global business.

This might perfectly suit Hong Kong firms. Kenneth Fang, managing
director of Fang Brothers Knitting Ltd and head of the TDC garment
advisory committee, says SAR firms have considerable advantages when they
set up the manufacturing process overseas.

If they manufacture in Hong Kong, costs are against them, Fang says, but
if they do so overseas -- and it could be in places such as Thailand or
the Philippines, not only the mainland -- then they have lower land,
labour and energy costs. As a result, "With their knowledge of world
markets and their management teams, they are well able to compete".

High costs have forced much of Hong Kong's manufacturing industries to
relocate to the mainland and elsewhere. But the brains of the operations
-- sales and marketing, quality control, logistic arrangements and
clothing designs -- remain firmly within Hong Kong. It is a transition
that has proved remarkably smooth and efficient.

I acknowledge that the above information may be used by the Hong Kong Trade Development Council (HKTDC) for incorporation in all or any of its database for direct marketing or business matching purpose (and may therefore become available to the public within and/or outside of Hong Kong for use by them), and for any other purposes as stated in the Privacy Policy Statement (available at http://www.hktdc.com/mis/pps/en); I confirm that I have the consent and the authority of each individual named in this form to release their personal data for the purposes stated herein.

(If you are from a member state of the European Union ("EU") / European Economic Area ("EEA")), PLEASE tick here if you accept our use of your provided data for direct marketing purposes.

*For non-EU/EEA customers, please skip this box which is solely for EU/EEA customers as required by the relevant data protection law in the EU.